Prohibits first fail accident and/or health insurance policies

Summary of specific provisions

This bill would amend the insurance law by adding a new article 33 which would prohibit tail first accident/or health insurance policies.

Section 3301 defines key terms.

Section 3302 establishes duties and prohibits certain action taken by the pharmacy benefits manager (PBM), who functions as an administrator in connection with pharmacy benefits. The legislation requires the PBM to disclose to the insured information pertaining to individual claims, along with an itemized invoice of the actual amounts paid to each phar- macist and pharmacy. Additionally, the legislation prohibits PMBs from enrolling pharmacies in contracts without a signed affirmation from the pharmacy or pharmacist, conditioning participation of a contract, and from discriminating between pharmacies on the basis, of co-payments or days of supply. The legislation requires PMBs to use the same National Drug Code price when calculating the reimbursement to the pharmacy and requires modifications to a prescription to remain with the original pharmacy.

Section 3303 prohibits health benefit plans that provide prescription coverage from reducing, limiting, or denying coverage when the insured was taking the medication or was currently covered by a policy that covered the drug. The legislation specifies that an insurer is allowed to make uniform changes in its benefit design that apply to all covered drugs or increase cost-sharing obligations' only due to an increase in the underlying drug prices.

Section 3304 requires that any time a change to a patient's medication is recommended, that all "switch communications" clearly inform the insured of the originally prescribed medication, advise the insured of their rights, any cost-sharing changes they will assume, and disclose any financial interest involved in the decision to switch medications.

Section 3305 establishes penalties in the event that a "switch communi- cation" is non-compliant or contains a false statement. These penalties include fines that shall not exceed $25,000.

Section 3306 authorizes the prescribing physician to override restrictions placed on a patient's medication by a PBM or insurer through fail first protocol in situations including when the treatment has been or is expected to be ineffective in treating the patient's disease or medical condition or is likely to cause an adverse reaction or other harm. Additionally, for medications with no generic equivalent and for which the prescribing physician feels there is no appropriate therapeutic alternative, the insurer or PMB is required to provide access to medications labeled by the United States Food and Drug Admin- istration without restriction.

Justification

Fail first, is an approach to prescribing drugs used by health insurers to control costs. Fail first, also called step therapy, insists that the least expensive drug in any class be proscribed to a patient first. If the treatment is ineffective, insurers will cover more expensive treatment options. This practice has serious negative conse- quences for consumers and the public health system. By limiting the array of medication options, both physicians and consumers are forced to compromise their treatment decisions in a way that is dangerous, time consuming and more expensive from a direct and indirect out-of-pocket cost perspective.

Under fail first, a consumer will often have to fail on one or more medications before they are allowed access to the medication that his or her physician would have tried as an initial treatment. It is poor clin- ical care to delay the start of effective treatment and expose a person to unnecessary risk. In this way, fail first denies patients the drugs they need when they need them, and effectively allows insurers co prac- tice medicine without a license. There are significant administrative costs associated with these types of policies and most importantly, consumers can relapse and require more expensive medical interventions such as hospitalization.

This bill provides safeguards for consumers and pharmacies by regulating the duties and actions that can be taken by the PBM, who functions as an administrator in connection with pharmacy benefits.

The bill prohibits insurers that provide prescription coverage under a health benefit plan from reducing, limiting, or denying coverage when the insured was taking the medication or was currently covered by a policy that covered the drug. The legislation provides transparency by requiring that all "switch communications" clearly inform the insured of the originally prescribed medication. Further, "switch communications" must advise the insured of their rights, any cost-sharing changes they will incur, and disclose any financial interest involved in the decision to switch the medication of the insured.

Most significantly, this bill allows the prescribing physician to over- ride any step therapy or fail first protocol. This medical veto is essential to ensure patient safety when the suggested change in medica- tion has been ineffective in treating the patient's disease or medical

condition, is expected to be ineffective, or is likely to cause an adverse reaction or other harm.

Prior legislative history

None

Fiscal implications

This bill should save taxpayers of New York a considerable amount in administrative costs and unnecessary medical treatment.

Effective date

This bill would effective 120 days after it shall have become law.